U.S. Bancorp Piper Jaffray faces a proposed fine of at least $75 million over its stock research practices and is attempting to persuade securities regulators to reduce that amount, a source familiar with the negotiations said Monday.
The regulators’ proposal is significantly higher than the $60 million maximum reported last week by the Wall Street Journal. Even if Piper’s lawyers are successful in securing a fine of $60 million or less, the securities firm would effectively see its entire operating profit for this year wiped out and would likely need help from parent U.S. Bancorp to shoulder the payment.
Piper officials declined to comment Monday.
Piper is one of 10 investment banks that have been caught up in a nationwide probe of their practices during the go-go stock market of the late ’90s. And the cumulative fines for the 10 are expected to top $1 billion. The penalties would settle charges that the firms tailored their research opinions on stocks to win or retain lucrative investment banking contracts. Final settlements are expected within three weeks.
The investigations of Piper and the other firms began this spring, with the Securities and Exchange Commission, the New York Stock Exchange, the National Association of Securities Dealers, New York Attorney General Eliot Spitzer and other states involved.